Recently in a World
Bank report on the ease of doing business INDIA moved unprecedentedly 30 places
up from 130 last year to 100 this year which revived the optimism after several
quarters of low growth and the government still aspires to be in the top 50 in
the next two years on the back of reforms it has been pursuing in the last few
years and on the promise to continue to do so in the future.
The government has
introduced reforms which helped INDIA improve the perception on the ease of
investing money in the country which has a direct link with employment in the
economy and the economic growth rate. Businesses employ people which increases
demand in the economy. Full-employment is the secondary objective of the
economic policies after the primary objective of controlling inflation. The
supply side reforms which the government achieved during its term resulted in
low inflation and interest rate and expectations and helped improve stability
in the economy that could be another factor that might help business and investment.
The bankruptcy and
insolvency reforms brought last year are seen to give businesses more flexibility
to move out of a business which is as important as the ease of starting a
business. The World Bank see this reform as vital for doing business in INDIA
and help resolve the problem of NPAs which has been holding businesses from
investment and the timely solution would give businesses a boost. Moreover,
NPAs are negative on the commercial banks balance sheets which could impair
credit to other businesses.
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